DealBook Briefing: Saudi Arabia’s Deep Pockets May Need a Top-Up

1BUSINESS

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Saudi Arabia is struggling to pay for its ambitions

The kingdom has poured money from its $250 billion Public Investment Fund into the SoftBank Vision Fund, Blackstone’s infrastructure fund, Uber, and Tesla shares at the behest of Crown Prince Mohammed bin Salman.

The Saudi fund aims to manage $400 billion by 2020, but it’s facing some funding issues, thanks to problems like the delayed I.P.O. of Saudi Aramco. More from the FT:

Prince Mohammed, 32, and his advisers are now upending government processes in place for decades as they scramble for other sources of funding to boost its firepower, according to people familiar with the kingdom’s reform plans. “The P.I.F. has made big commitments so it needs to come up with the cash,” said Steffen Hertog, associate professor at the London School of Economics and a Middle East expert. “But it is seen as opaque, a black box. Few know what’s going on there, including sometimes other government ministries.”

The bigger question is whether Prince Mohammed will need to curb his economic ambitions. He wants to create a $500 billion megacity, and he’s waging a trade war with Canada. If his kingdom is facing financial constraints, he may need to take a humbler approach.

Sinclair’s dashed dream

Tribune broke off a deal on Thursday to sell itself to Sinclair Broadcast Group for $3.9 billion (and also sued for breach of contract). That ended Sinclair’s effort to create a conservative news giant that could have challenged Fox News.

Tribune cited “unnecessarily aggressive and protracted negotiations” with government regulators. The F.C.C. — which had passed policies widely seen as favorable to Sinclair — raised serious concerns last month about the deal.

Tribune should have few problems finding a new buyer. But Sinclair’s route to national TV dominance will take more searching.

At issue is whether Mr. Musk has solid financial backing for a buyout. If not, he could be in trouble for manipulating the carmaker’s stock price. (As of this morning, he has produced no evidence of funding.)

The S.E.C. was already looking into Tesla over its manufacturing and sales projections, which could have misled investors and inflated the company’s value.

World Bank prepares the first blockchain bond

Say hello to Bondi — or Blockchain Offered New Debt Instrument, if you’d prefer. It’s a new bond created by the World Bank, said to be the first created, allocated, transferred and managed with blockchain. The Commonwealth Bank of Australia is arranging the sale, hence the cutesy Bondi Beach reference.

Why bother? The World Bank says it could “help simplify raising capital and trading securities; improve operational efficiencies; and enhance regulatory oversight.” But it’s unclear how big the bond offering will be, which means this could be more experiment than breakthrough.

Who wants to own a canned-soup business?

Third Point, the hedge fund run by Daniel Loeb, has found a new target for its shareholder activism in Campbell Soup. The twist: It has an unusual partner in George Strawbridge Jr., a grandson of the company’s founder, who as a longtime director opposed a previous attempt to sell the company.

Owning more than 8 percent of the company’s stock, the two argue that Campbell has struggled to diversify its products as customers flock to healthier offerings, and that the company should be sold.

Their campaign is well-timed: Campbell’s longtime C.E.O. stepped down in May, and its board has been reviewing options since then. But few members of the Campbell clan appear to support a sale — even if a buyer could be found.

A push for a tax overhaul

The Economist thinks that the tax systems around the world are too complex and full of loopholes. In its cover story this week, the magazine explains how they could be remade for the 21st century.

Here’s one suggestion:

All countries should tax both property and inheritance more. These taxes are unpopular but mostly efficient. In a world where property ownership brings windfalls that persist across generations, such taxes are desirable. A conservative first step would be to roll back recent cuts to inheritance tax. A more radical approach would be to introduce a land-value tax, the most efficient of all property taxes and one with a long liberal heritage.

And a second:

To stop companies shifting profits, governments should switch their focus from firms to investors. Profits ultimately flow to shareholders as dividends and buybacks. But few people are likely to emigrate to avoid taxes on their investment income.

Trump might get his Space Force

Vice President Mike Pence has outlined how the U.S. government would build a stand-alone military Space Force by 2020. It would have staff drawn from across the military and a development agency focused on space warfare technology.

Mr. Pence said that “adversaries have transformed space into a warfighting domain already, and the United States will not shrink from this challenge.” Initially reluctant Pentagon officials are supporting the plan, but it has to go through Congress, where critics abound. (Mr. Trump wants the Space Force to receive $8 billion over the next five years.)